Let’s distinguish between four things. Many leaders confuse them, in themselves and in others. They are not the same and they solve different problems.

SKILLS

Skills is what I call the entire set of knowledge, experiences and behaviors we have. Skills are what we know and how we use it, what we learn and what we develop. We have technical skills, we have people skills and different jobs require different mixtures of skills. We spend a lot of time developing our skills so we get better at solving certain tasks and we can be ready for tasks we anticipate to have to do in the future. We also do it because it’s enjoyable and fun, we do it out of competitiveness, to get good grades, to get promoted. We frequently do it out of conformity, because that’s the game we’ve been asked to play, from school upwards. Companies employ complex methodologies to assess and develop the skills of their employees, according to what they think would best benefit the company. Jobs, promotions and raises are gotten, to a significant degree, based on the skills we have and our ability to prove we have them, primarily by pointing to past results and by demonstrating our knowledge through good communication. Leaders, when asked how they develop their people will often talk about the skills of those individuals and how they’re helping them sharpen and develop them. Conferences, books, tutorials, training programs, they are also, mostly, about skills. Skills matter.

WORK

Work is the effort, the time, the sweat, the activity, the motion. Work is the motivation, the determination to choose a goal and to put in the effort required to achieve it. Work is being here, doing this, instead of being somewhere else, doing something else. As part of a labor contract, work is required, but of course, every reasonable leader’s ambition is not to force work out of her people and have them doing the bare minimum, or do it out of fear, but to have motivated people that put energy and proactivity into their work.

WORTHINESS

Worthiness is a more interesting concept. People get self worth out of being good at their job. People get self worth from status. Worth is also assigned to them at the group and company level by their bosses and by the performance systems around them. Worth is also defined and accentuated by the culture they’re in, at team level, company level, or at population level.

People with different personality traits relate differently to work. Those with a high conscientiousness score will be more likely to have a sense of duty and to feel bad if they’re not working enough, whatever enough means to them. Those with a high neuroticism score may have anticipatory anxiety about future work, they may stress out about their potential performance in tasks they don’t even know of yet. Others are going to be more casual and relaxed about it; they had a bad day, that’s it, there’s another day tomorrow. The sense of wasted time, of not doing anything productive, it will stress some people but will leave others unaffected, mentally free to go enjoy a beer and a relaxing evening nonetheless. In certain places, overwork, work until one is visibly exhausted, is prized. In other places, the status symbol is to be able to stop work before one is exhausted, leave and do something else. Discretionary time is the new discretionary income.

Some people even attribute religious overtones to work, as a kind of daily purgatory, a constant routine of atonement. It is true that activity of any kind, and physical effort as well, can have positive effects on one’s state of mind, but it shouldn’t be generalized.

The mature individual will be self-aware of her own sense of worth, of what makes her feel worthy and what not, of her personality and internal drivers, and also of all the organizational and cultural triggers around her that affect her state of mind. She will not just wake up one day feeling useless and not knowing why. She will also not wake up one day feeling like a million bucks and now knowing why. The insights she applies onto herself she also applies on others. To her, her feeling of self worth is not a vaguely defined state of mind, but a parameter she understands and, to a good degree, controls.

The wise leader will carefully consider worth and work with the culture, the processes, and all the other tools at his disposal to understand how his people value themselves and how that needs to be used towards maximum desired outcome, whatever the definition of outcome may be.

IMPACT

Impact is the amount of change you generate into the target space. The amount of things you change, build, sell, attitudes you influence, decisions you trigger, perceptions you shape. The thing about impact, it’s just impact. It doesn’t matter if it’s made by people with skills or no skills, by motivated or demotivated workers, it doesn’t matter how it affects their sense of worth, it just is there, or it isn’t. Impact is not about the process, it’s all about the outcome. On the other hand, a culture focused exclusively on impact will drift towards immorality.

Let’s break down the different type of cultures and organizations one can create by just tweaking these four concepts: skills, work, worth and impact.

Skills is the development dimension, and that’s important. This is where people take the time to explicitly learn and get better, but better at what? The problem with a skills heavy focus is that, if unbalanced, it can easily become a ludic fallacy. Like school, there’s hierarchies of things to learn and get better at, and people feel worthy just because they jump through the hoops. When a skills culture is detached from impact, it’s detached from economic reality and it leads to an isolated, navel gazing culture, resistant to change and ultimately failing.

Work needs to happen or no amount of skills is going to lead to any impact. Work is a funny dimension: you need to do what needs to be done, not only what you like to do, you need to have some grit and plow through the tough times. But then again, if you’re too focused on sweating, you’re going to miss the forest for the trees. Work by itself is not necessarily the solution to anything, or we’d split in two and half of us would dig a big ditch and the other half would come from behind and fill it back up. But skilled, impactful work, now, that’s something else. That is what you’re looking for.

Worth is the human dimension. People are not robots and we need meaning, to see a purpose, to believe that we can have an impact, to empathize with the goal, to act according to morals we can buy into. Well, that’s not actually true. History has shown that we don’t really need any of that, people will efficiently do all kinds of things if pushed enough, but when it comes to voluntary, knowledge based, creative work, real impact and and sustained work becomes more likely if self worth is present.

Impact is the I don’t care how but it needs to happen dimension. Have you sold or have you not? Don’t bother me with skills, with feelings of self worth, that’s something you take care of before you come to talk to me. You tired, you’ve been working long hours? Don’t care, where’s the result? Impact is a great sanitizer and the enemy of bullshit, but impact is also a simplistic measure. It’s brutality makes it very effective in some situations, but if applied across the board it will eliminate sophistication in decisions and it will destroy knowledge based cultures. I like to use what I call compassionate impact, which is clear and unambiguous focus on impact as the ultimate goal, but without any meanness and also recognizing the value of other dimensions. The final decision is made based on impact, but it is made after mature consideration.

How do you shape these dimensions, how do you actually make it happen in the organization? The fundamental question is simple: What do you reward? What do you not tolerate?

When you give out raises and promotions, or just words of encouragement, do you give them for skills, for work or for impact?

What do you not tolerate? Do you not tolerate lack of skill, slacking off work, or not having the right kind of impact? None is good, sure, but what’s the one that really mustn't happen?

Answer these questions clearly, behave consistently, and you’ll have taken care of a large chunk of your job as a leader. Communicate your thinking, make it obvious, explain your decisions and make sure everyone understand why you did what you did.

These are the levers you must pulls and buttons you must push to shape and control your organization.